Responding to the release today by the ONS of CPI and RPI inflation figures for August, David Kern, Economic Adviser to the British Chambers of Commerce, said:

"The global financial crisis and the acute uncertainties in the UK financial system have transformed the economic situation for the worse. The immediate policy focus is on restoring savers' confidence. But the more serious danger, beyond the immediate crisis, concerns the adverse effects on the wider economy, particularly the higher cost and reduced availability of finance to businesses, mainly to small firms

“Today’s inflation figures show a consolidation of last month's big fall in annual inflation. Consumer prices index (CPI) annual inflation – the Government’s target measure – was 1.8 per cent in August, down from 1.9 per cent in July, and slightly below market expectations. Annual Retail Prices Index (RPI) inflation was 4.1 per cent in August, up from 3.8 per cent in July, mainly due to an increase in average mortgage interest payments. The higher RPI highlights the squeeze on disposable incomes resulting from previous interest rate increases.

"Given the worsening dangers facing the economy, we strongly urge the MPC to consider further urgent steps to ease monetary conditions. Unless inter-bank rates fall markedly, a quarter point cut in Bank Rate would still leave monetary conditions tighter than they were before the current crisis started."